Employers Can Expect Health Insurance Premiums to Rise 5% a Year Over The Next Decade

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Premiums for employer-provided health insurance will increase around 5 percent a year over the next decade, according to the Congressional Budget Office.

This year, the average premium for employment-based insurance will be $6,400 for single coverage and $15,500, according to CBO. By 2025, that will increase to $10,000 for single coverage and $24,500 for family coverage.

The cost of insurance in the individual market is expected to increase at an annual rate of 6 percent over the next decade, according to CBO.
So much for President Barack Obama’s claim that the Affordable Care Act would reduce health care costs. Instead, Obamacare’s impact on health insurance premiums is mixed, according to CBO.
Some provisions, such as the individual mandate, have moderated growth in health insurance costs by bringing more healthy individuals into the insurance pool.
Other provisions tend to increase average premiums. These include requiring insurers to cover everyone who applies for insurance, barring them varying premiums based on enrollees’ health history, and requiring insurers to cove specific types of health care services.
But the CBO concludes that “premium increases resulting from the ACA’s regulations will have a relatively small effect on the overall average of private private health insurance premiums.”
Critics of Obamacare, however, pointed to the CBO report as evidence that the ACA isn’t working.
“Obamacare has proven that federal regulation is not the prescription for lower health care costs,” said Sen. Lamar Alexander, R-Tenn.

Alexander, who chairs the Senate health committee, said he is “working on developing policies that build more flexibility and competition into the private health insurance market so we can start over, and go step by step to fix our broken health care system, increase choice and reduce costs so that more Americans can afford to buy insurance.”
There’s strong support in Congress for repealing the ACA’s so-called “Cadillac tax” on high-value health insurance plans. Congress already has delayed the imposition of this excise tax from 2018 to 2020.
Repealing this tax, however, would result in higher average health insurance premiums. Many employers will move to lower-premium plans in order to avoid the Cadillac tax, CBO projects. As a result, average premiums in 2020 will be 10 percent lower in 2020 than they would be without the tax, according to CBO.